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Small Business Association reinstates dealer loan program
By Kristen Russo
YOUNGSTOWN
Soon, local auto, boat and recreational-vehicle dealers will have another option for financing the inventory in their showrooms.
The Small Business Administration is relaunching its Dealer Floor Plan Pilot Loan program. The program will run through Sept. 30, 2013.
The rules are published on the website of The Federal Register, and a procedural guide to the program can be found at www.sba.gov/content/dealer-floor-plan-financing-program-0.
The SBA will begin accepting applications Wednesday.
“Since the recession began, this type of financing has been difficult to find,” SBA spokesman Michael Stamler said. “This makes it less difficult.”
Stamler said the Small Business Jobs Act of 2010 allowed for the relaunch. It also allowed the maximum loan amount to increase to $5 million, up from $2 million when the original program began in July 2009.
The revolving line of credit is offered through the SBA’s 7(a) program for businesses that sell new and used items that can be titled upon purchase, Stamler said. This includes not only automobiles, boats and RVs, but also motorcycles, trailers and manufactured homes, among other items.
“This is to help these businesses get credit so they can get financing, sell items and create jobs,” Stamler added.
Gil Goldberg, SBA director for the Cleveland district, said the program changes will help more local dealers obtain financing.
“I think the $5 million opens it up to some of the larger dealerships and makes it more attractive to some of the banks because of the larger loan size,” Goldberg said.
Other changes that will make it possible for more dealerships to qualify include allowing businesses to refinance a current floor plan and allowing dealerships with greater net incomes to qualify, Goldberg said.
To qualify, a dealership’s tangible net worth can’t exceed $15 million, and its net income for each of the past two years can’t exceed $5 million.
Goldberg said the first time the SBA offered the program, he received a number of calls from dealerships in the Youngstown area who didn’t qualify because they were either too large or had a current floor-plan line with a manufacturer.
The SBA recommends interested dealerships contact their lenders or the local SBA office to obtain a list of SBA-approved lenders.